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Bargaining under large risk - an experimental analysis

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  • Werner Guth
  • Sabine Kroger
  • Ernst Maug

Abstract

We experimentally study behavior in bargaining situations under large risks. To implement realistic risks involved in the field, we calibrate the experimental parameters from an environment involving substantial variation in profits, the motion picture industry. The leading example is the production of a movie that may give rise to a sequel, so actors and producers negotiate sequentially. We analyze the data in light of alternative behavioral approaches to understanding bargaining behavior under large risk.

Suggested Citation

  • Werner Guth & Sabine Kroger & Ernst Maug, 2009. "Bargaining under large risk - an experimental analysis," New Zealand Economic Papers, Taylor & Francis Journals, vol. 43(2), pages 105-129.
    • Handle: RePEc:taf:nzecpp:v:43:y:2009:i:2:p:105-129
    DOI: 10.1080/00779950903005481
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    More about this item

    Keywords

    negotiation experiment; ultimatum bargaining; parameter calibration; movie production; risk sharing;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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